The merger mission of Dena Bank,Vijaya Bank and Bank of Baroda ends as a catastrophe

The merging attempt of Dena Bank and Vijaya Bank with Bank of Baroda(BoB) was seen turns to be a loser game for three.The Dena Bank shareholders also ended up as losers,regardless of the expectations of gain in the share value.

The swap value for the prices suggest that traders were anticipating a swap ratio of not less than 150 shares of BoB in return for 1,000 Dena Bank shares. Dena Bank’s shares need to correct by about 28% to align with reality.

The reports suggest that,the rescue mission of the weakest bank put others also in trouble.The balance sheet of Dena Bank also indicate fall of share values.Dena Bank has been barred from lending by the regulator for the last seven months.

The fact that this is despite Vijaya Bank’s superior financial performance makes it even more painful for its shareholders.

In its bid to create the third largest lender with a balance sheet size of more than ₹14 trillion and a network of 9,489 branches, the government has subjected itself and other shareholders to a painful merger process. The erosion of value has only begun.